Dexco (DXCO3) Q4 2025 earnings summary

Executive summary

• Net revenue for 2025 was R$8.25 billion, with adjusted recurring pro forma EBITDA of up to R$2.47 billion (including LD Celulose), reflecting strong performance in Wood and LD Celulose, while Tiles and Metals faced ongoing headwinds and restructuring.

• Recurring net income ranged from R$107 million to R$791 million, with leverage at 3.35x net debt/EBITDA, prompting a focus on deleveraging and operational efficiency.

• Strategic actions included asset sales, portfolio simplification, plant closures, and a focus on higher value-added segments.

• The end of the 2021-2025 investment cycle shifted focus to cash generation, value creation, and deleveraging for 2026.

• Leadership transition and decisive restructuring in ceramics and sanitary ware divisions were key themes.

Financial highlights

• Sustaining cash flow was positive at R$191 million for 2025, with R$136 million generated in Q4; however, some reports show total free cash flow for FY2025 as negative R$382 million.

• Net debt stood at R$5.52 billion, with an average cost of 9.52% of CDI and an average term of 5.4 years; 92% of debt was long-term.

• Final leverage was 3.35x net debt/EBITDA, expected to fall to 2.7x by end-2026 through asset monetization and operational improvements.

• CapEx was R$831 million, down 4.8% year-over-year, mainly due to forestry investments and project completion.

• Gross margin for 2025 was 20%, stable year-over-year.

Outlook and guidance

• Prioritizing deleveraging, cost discipline, and operational efficiency, with a focus on margin recovery, especially in ceramics.

• Targeting net debt/EBITDA of 2.7x by end-2026.

• Expecting healthier margins in sanitary ware and metals, and double-digit margins in ceramic tiles by 2027.

• Continued focus on cash generation, working capital optimization, and price discipline across divisions.